Difference between revisions of "Par"

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The par value of a security, usually a [[bond]], is the fixed value placed on it by the security's issuer and imprinted on the security's certificate - in the case of [[U.S. Treasuries]] par is $100. In the bond market, where par is most commonly qoted, it determines the size of the [[coupon]] payment - though not the bond's [[yield]] - and less commonly the size of some stocks' [[dividend]] payment, and par is often used as a benchmark to a bond's current [[market price]].
The par value of a security, usually a [[bond]], is the fixed value placed on it by the security's issuer and imprinted on the security's certificate - in the case of [[U.S. Treasuries]] par is $100. In the bond market, where par is most commonly quoted, it determines the size of the [[coupon]] payment - though not the bond's [[yield]] - and less commonly the size of some stocks' [[dividend]] payment, and par is often used as a benchmark to a bond's current [[market price]].


== Market use ==
== Market use ==


Par value is also referred to as nominal value or face valueREF and has little financial relevance after the [[securities]] have been issued.<ref>{{cite web|url=http://www.answers.com/topic/face-value-1|name=Par value|org=Answers.com|date=December 13, 2008
Par value is also referred to as nominal value or face value and has little financial relevance after the [[securities]] have been issued.<ref>{{cite web|url=http://www.answers.com/topic/face-value-1|name=Par value|org=Answers.com|date=December 13, 2008
}}</ref> However, in bond markets it is frequently used to [[benchmark]] the premium or discount the bond's current market price represents. Par value in the [[share]] market is less important and is usually significantly lower than the market price and is sometimes used by issuers of [[preferred stock]] to determine dividend payments.<ref>{{cite web|url=http://www.allbusiness.com/glossaries/par-value/4945265-1.html|name=Business Definition for: par value|org=AllBusiness.com|date=December 13, 2008}}</ref> No-par-value [[stock]]s, as their name suggests, are issued without a par value assigned in their corporate charter or printed on the stock certificate.<ref>{{cite web|url=http://www.wordwebonline.com/en/NOPARVALUESTOCK|name=Noun: no-par-value stock|org=WordWebOnline.com|date=December 13, 2008
}}</ref> However, in bond markets it is frequently used to [[benchmark]] the premium or discount the bond's current market price represents. Par value in the [[share]] market is less important and is usually significantly lower than the market price and is sometimes used by issuers of [[preferred stock]] to determine dividend payments.<ref>{{cite web|url=http://www.allbusiness.com/glossaries/par-value/4945265-1.html|name=Business Definition for: par value|org=AllBusiness.com|date=December 13, 2008}}</ref> No-par-value [[stock]]s, as their name suggests, are issued without a par value assigned in their corporate charter or printed on the stock certificate.<ref>{{cite web|url=http://www.wordwebonline.com/en/NOPARVALUESTOCK|name=Noun: no-par-value stock|org=WordWebOnline.com|date=December 13, 2008
}}</ref>
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== References ==
== References ==
<references />
<references />
[[Category:Bonds]]
[[Category:Fixed Income]]

Latest revision as of 03:27, 7 June 2013



The par value of a security, usually a bond, is the fixed value placed on it by the security's issuer and imprinted on the security's certificate - in the case of U.S. Treasuries par is $100. In the bond market, where par is most commonly quoted, it determines the size of the coupon payment - though not the bond's yield - and less commonly the size of some stocks' dividend payment, and par is often used as a benchmark to a bond's current market price.

Market use[edit]

Par value is also referred to as nominal value or face value and has little financial relevance after the securities have been issued.[1] However, in bond markets it is frequently used to benchmark the premium or discount the bond's current market price represents. Par value in the share market is less important and is usually significantly lower than the market price and is sometimes used by issuers of preferred stock to determine dividend payments.[2] No-par-value stocks, as their name suggests, are issued without a par value assigned in their corporate charter or printed on the stock certificate.[3]

References[edit]

  1. Par value. Answers.com.
  2. Business Definition for: par value. AllBusiness.com.
  3. Noun: no-par-value stock. WordWebOnline.com.